NANOSONICS LIMITED — AGM Information 2020

Nov 23, 2020

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2020 ANNUAL GENERAL MEETING

24 NOVEMBER, 2020

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ACKNOWLEDGEMENT OF COUNTRY
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We acknowledge the traditional owners of the various lands in which we meet virtually today and pay respects to all Aboriginal Elders, past and present, and acknowledge today’s Aboriginal communities who are the custodians of these lands.

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BOARD OF DIRECTORS
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Maurie Stang Non-Executive Chairman

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Steven Sargent Non-Executive Director, Deputy Chairman and Lead Independent Director

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Michael Kavanagh CEO and President

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Lisa McIntyre Non-Executive Director

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David Fisher Non-Executive Director

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Marie McDonald Non-Executive Director

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Geoff Wilson Non-Executive Director

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ONLINE ATTENDEES – QUESTION PROCESS
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• When the Question function is available, the Q&A icon will appear at the top of the app.

• To send in a question, simply click in the ‘Ask a question’ box, type your question and the press the send arrow

• Your question will be sent immediately for review

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ONLINE ATTENDEES – VOTING PROCESS
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• When the poll is open, the vote will be accessible by selecting the voting icon at the top of the screen

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• To vote simply select the direction in which you would like to cast your vote, the selected option will change colour.

• There is no submit or send button, your selection is automatically recorded.

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CHAIRMAN’S ADDRESS

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OUR MISSION OUR VALUES
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We improve the safety of patients, clinics, their staff and the environment by transforming the way infection prevention practices are understood and conducted, and introducing innovative technologies that deliver standards of care.

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EXPANDING GLOBAL PRESENCE

Nanosonics distributes its products in 27 countries, either through direct operations or via distributor partners.

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INSTALLED BASE TOTAL REVENUE
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Global installed base grew 13% to 23 720 ,

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EVERY DAY APPROXIMATELY 78k

patients are protected from the risk of cross contamination because their probe has been decontaminated using trophon.

GLOBAL INSTALLED BASE UP

13[%]

Total Revenue up 19% to m $100.1

In the first three quarters of the year, strong growth was experienced with total revenue increasing 26% on prior corresponding period.

Q4 Revenue of $25.3 million was essentially flat compared to prior corresponding period (increase of 1%), driven largely by the expected implications of the COVID-19 pandemic with very limited hospital access and a reduction in a range of healthcare procedures during this period.

FY20

TOTAL REVENUE VS PCP ($M)

19[%]

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R&D
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Substantial investment made in new product development with important milestones met throughout the year towards our product expansion goals.

37[%]

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INVESTMENT IN R&D

($M)

COMPLIANCE AND TRACEABILITY

Digitally-enabled tools to increase visibility and control around infection risk mitigation.

ENVIRONMENTAL DECONTAMINATION

Novel technologies and chemistries to reduce cross-contamination risk

coming from high contact surfaces and environment.

FIVE CORE AREAS OF FOCUS

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STORAGE SOLUTIONS

Assurance that reprocessed devices are not subsequently contaminated and are always available for next use.

INSTRUMENT CLEANING

Mandatory critical first step which sets up the effectiveness of all downstream disinfection procedures.

INSTRUMENT DISINFECTION

High level and low level disinfection and sterilisation for medical devices before re-use with a patient.

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ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE
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CAPITAL MANAGEMENT
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CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS ($M)

$91.8m

as at 30 June 2020

Cash and cash equivalents up $19.6 million to $91.8 million supporting ongoing growth and expansion.

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BOARD OF DIRECTORS
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Maurie Stang Non-Executive Chairman

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Steven Sargent Non-Executive Director, Deputy Chairman and Lead Independent Director

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Michael Kavanagh CEO and President

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Lisa McIntyre Non-Executive Director

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David Fisher Non-Executive Director

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Marie McDonald Non-Executive Director

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Geoff Wilson Non-Executive Director

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Protection by design

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CEO & PRESIDENT’S ADDRESS

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OUR STRATEGIC PRIORITIES
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TROPHON AS STANDARD OF CARE

• Support establishment of international guidelines.

• Provide awareness and education to highlight risks of cross contamination for all semi critical transducers.

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EXPAND GEOGRAPHIC FOOTPRINT

• Expand operations across Asia Pacific and EMEA with trophon plus new products.

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PRODUCT EXPANSION

• Expand portfolio of infection prevention solutions to address unmet needs.

• Leverage technology platforms for potential expanded indications.

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INVEST TO GROW

• Maintain strong financial position to support growth.

• Deliver operational efficiencies, scale and leverage.

• Ensure customers have a positive experience with all aspects of the product and brand.

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Protection by design

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INSTALLED BASE
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Global installed base grew 13% to 23 720 units ,

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GLOBAL INSTALLED BASE UP 13[%]

• In the first three quarters of the year, the growth in installed base in North America was in line with expectations (i.e. similar to FY19). During that period, the number of new units installed in Europe and Middle East was up 37% and up 56% in Asia Pacific compared with the prior corresponding period.

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NORTH AMERICA INSTALLED BASE UP 13[%]

• Installed base growth was impacted in Q4 due to COVID-19 pandemic restrictions with the number of units down 46% compared to prior corresponding period.

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EVERY DAY APPROXIMATELY 78k

patients are protected from the risk of cross contamination because their probe has been decontaminated using trophon.

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EUROPE AND MIDDLE EAST INSTALLED BASE UP

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27[%]

ASIA PACIFIC INSTALLED BASE UP 9[%]

Graphs are not to scale and therefore not comparable

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SIGNIFICANT GLOBAL MARKET OPPORTUNITY
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Installed base opportunity Market Penetration Cumulative Installed Base
• Increasing number of international guidelines requiring
high level disinfection (HLD) supporting growing
120,000units • international demand.Nanosonics expanding its footprint geographically both
direct and through distribution.
Installed base opportunity Market Penetration Cumulative Installed Base • Fundamentals for adoption strong with requirements for
HLD in place.
• trophon installed base over 20,990 and already in over
5,000 hospitals and clinics, including majority of
40,000units • luminary hospitals.Nanosonics has a direct sales operation of 74 people
as well as partnerships with all leading ultrasound
companies to drive ongoing adoption.
Installed base opportunity Market Penetration Cumulative Installed Base • Expanded geographical reach, stronger fundamentals for
adoption and growing awareness.
• Expanded infrastructure with sales teams increasing in the
UK and Germany, appointment of local clinical and
40,000 regulatory leadership and appointment of dedicated
resource to support distributor partners.
units
• A range of business models in place to support market
requirements.
Installed base opportunity Market Penetration Cumulative Installed Base
• Sales mainly in ANZ where market penetration is>75%.
• Japan market development strategy continues with
distribution agreements in place with five key distributors.
40,000 • Continued development of China market entry strategy.
units • Assessment underway for further expansion across Asia Pacific.
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• Assessment underway for further expansion across Asia Pacific.

1. Current installed base. Remaining potential opportunity. Graphs are not to scale and therefore not comparable.

2. Internal estimate based on historical regional estimates of the installed base of ultrasound consoles and those associated with procedures where high level disinfection may be required.

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EXPANDING GLOBAL PRESENCE

Nanosonics distributes its products in 27 countries, either through direct operations or via distributor partners.

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TOTAL REVENUE
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Total Revenue up 19% to m $100.1

In the first three quarters of the year, strong growth was experienced with total revenue increasing 26% on prior corresponding period.

Q4 Revenue of $25.3 million was essentially flat compared to prior corresponding period (increase of 1%), driven largely by the expected implications of the COVID-19 pandemic with very limited hospital access and a reduction in a range of healthcare procedures during this period.

FY20 Q1-Q3 AND Q4 TOTAL REVENUE VS PCP ($M)

FY20 FY20 Q1-Q3 AND Q4 TOTAL REVENUE VS PCP TOTAL REVENUE VS PCP ($M) ($M) 19[%] 26[%] 1[%]

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TOTAL REVENUE BY REGION
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FY20 TOTAL REVENUE VS PCP ($M)

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FY20 Q1-Q3 AND Q4
TOTAL REVENUE VS PCP ($M)
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18% 25% 0.4%
37% 43% 20%
17% 27% 10%
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Graphs are not to scale and therefore not comparable

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TOTAL REVENUE
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Capital Revenue down 9% to

m $30

While sales to end customers increased during the year, overall capital revenue decreased reflecting:

A reduction in the number of units purchased by GE Healthcare compared with the prior corresponding period. This reduction was due to significant destocking in H2 of FY18, resulting from the earlier than anticipated FDA approval of trophon2 and the subsequent restocking of inventory of trophon2 in FY19 upon the launch of trophon2; and

A delay in capital sales to customers during Q4 as a result of the COVID-19 pandemic.

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FY20 CAPITAL FY20 Q1-Q3 AND Q4
REVENUE VS PCP CAPITAL REVENUE VS PCP
($M) ($M)
9 [%]
5 [%]
34 [%]
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CONSUMABLE/SERVICE REVENUE
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Consumables/ Service Revenue up 36% to $70.1m

In the first three quarters of the year, revenue was up 39% on prior corresponding period. In Q4, a reduction in the volume of ultrasound procedures was experienced due to COVID-19 restrictions. Despite this reduction in ultrasound procedures, consumables and service revenue grew 29% in Q4 compared to prior corresponding period.

In June, as hospital departments resumed activities in many markets, global sales of consumables to end customers trended back to approximately 80% of Q1 to Q3 levels.

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FY20 CONSUMABLES/ FY20 Q1-Q3 AND Q4
SERVICE REVENUE CONSUMABLES/SERVICE REVENUE VS PCP
VS PCP ($M) ($M)
36 [%]
39 [%]
29 [%]
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NEW PRODUCT DEVELOPMENT
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Substantial investment made in new product development with important milestones met throughout the year towards our product expansion goals.

37[%]

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INVESTMENT IN R&D

($M)

COMPLIANCE AND TRACEABILITY Digitally-enabled tools to increase visibility and control around infection risk mitigation.

ENVIRONMENTAL DECONTAMINATION

Novel technologies and chemistries to reduce cross-contamination risk

coming from high contact surfaces and environment.

FIVE CORE AREAS OF FOCUS

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STORAGE SOLUTIONS

Assurance that reprocessed devices are not subsequently contaminated and are always available for next use.

INSTRUMENT CLEANING Mandatory critical first step which sets up the effectiveness of all downstream disinfection procedures.

INSTRUMENT DISINFECTION

High level and low level disinfection and sterilisation for medical devices before re-use with a patient.

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FREE CASH FLOW
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FREE CASH FLOW

FREE FLOW CASH

($M)

$20.9m

Free cash flow for the year was $20.9 million compared with $2.6 million in prior corresponding period, driven by increased receipts from customers.

CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

($M)

$91.8m

as at 30 June 2020

Cash and cash equivalents up $19.6 million to $91.8 million supporting ongoing growth and expansion.

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OPERATING EXPENSES
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$63.2m

OPERATING EXPENSES

($M)

The Company continued to invest in its strategic growth agenda with operating expenses up 28% to $63.2m.

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28 [%]
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PROFIT BEFORE TAX

PROFIT BEFORE TAX ($M)

12.4m $

as at 30 June 2020

As a consequence of the planned increase in investment in growth, as well as the impacts of COVID-19 on Q4 revenue, operating profit before tax was $12.4m compared with $16.8 million in prior corresponding period.

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UPGRADE OPPORTUNITY
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Upgrade 7+ years from installation

Age distribution of the Global Installed Base as at October 2020

Significant upgrade opportunity continues to emerge as existing install base ages and new generation devices are introduced into the market

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2020 ANNUAL GENERAL MEETING

FORMAL BUSINESS

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RESOLUTION 1

Re-election of a director – Mr Steve Sargent

Resolution: That Mr Steve Sargent, who retires as a Director pursuant to the Company’s Constitution and, being eligible, offers himself for re-election, be re-elected a Director.

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Proxy votes received Number % For : 189,997,806 98.72 Against : 1,290,492 0.67 Discretion : 1,171,565 0.61 Abstained/Excluded : 403,115 -

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RESOLUTION 2

Re-election of a director – Ms Marie McDonald

Resolution: That Ms Marie McDonald, who retires as a Director pursuant to the Company’s Constitution and, being eligible, offers herself for re-election, be re-elected a Director.

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Proxy votes received	Proxy votes received	Number	%
For	:	190,026,756	98.72
Against	:	1,281,547	0.67
Discretion	:	1,176,625	0.61
Abstained/Excluded	:	378,051	-

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RESOLUTION 3

Election of a director – Dr Lisa McIntyre

Resolution: That Dr Lisa McIntyre, who was appointed to the Board since the 2019 Annual General Meeting and retires in accordance with the Company’s Constitution and ASX Listing Rule 14.4, and, being eligible, offers herself for election, be elected as a Director.

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Proxy votes received Number % For : 191,114,188 99.3 Against : 158,591 0.08 Discretion : 1,196,308 0.62 Abstained/Excluded : 393,893 -

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RESOLUTION 4

Remuneration Report

Resolution: That the Remuneration Report for the financial year ended 30 June 2020 be adopted.

Proxy votes received		Number	%
For	:	177,485,874	97.43
Against	:	3,496,042	1.92
Discretion	:	1,184,413	0.65
Abstained/Excluded	:	10,696,652	-

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RESOLUTION 5

Issue of 19,112 Performance Rights to the Chief Executive Officer and President, Mr Michael Kavanagh, under the 2020 Short Term Incentive (2020 STI)

Resolution: That approval be given for all purposes under the Corporations Act 2001 (Cth) and the ASX Listing Rule 10.14 for the issue of 19,112 Performance Rights to Mr Michael Kavanagh under the Nanosonics Omnibus Equity Plan ( Omnibus Plan ) in respect of the 2020 STI, on the terms set out in the Explanatory Notes accompanying this Notice of Meeting and in accordance with the Rules of the Omnibus Plan (as amended from time-to-time).

Proxy votes received		Number	%
For	:	189,367,819	98.97
Against	:	819,752	0.42
Discretion	:	1,156,950	0.61
Abstained/Excluded	:	1,518,461	-

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RESOLUTION 6

Issue of 208,884 Share Appreciation Rights and 143,298 Performance Rights to the Chief Executive Officer and President, Mr Michael Kavanagh, under the 2020 Long-Term Incentive (2020 LTI)

Resolution: That approval be given for all purposes under the Corporations Act 2001 (Cth) and the ASX Listing Rule 10.14 for the issue of 208,884 Share Appreciation Rights and 143,298 Performance Rights to Mr Michael Kavanagh under the Omnibus Plan in respect of the 2020 LTI, on the terms set out in the Explanatory Notes accompanying this Notice of Meeting and in accordance with the Rules of the Omnibus Plan (as amended from time-to-time).

Proxy votes received Number % For : 175,148,991 91.46 Against : 15,185,698 7.93 Discretion : 1,167,110 0.61 Abstained/Excluded : 1,361,184 -

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RESOLUTION 7

Re-insertion of Proportional Takeover Provisions in Constitution

Resolution: That the proportional takeover provisions at clause 1.6 of the Company’s Constitution, in the form attached to this Notice of Meeting as Annexure A, be re-inserted into the Constitution for a period of three years commencing on the day this special Resolution is passed.

Proxy votes received Number % For : 190,195,132 98.88 Against : 991,307 0.51 Discretion : 1,173,365 0.61 Abstained/Excluded : 503,180 -

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ONLINE ATTENDEES – QUESTION PROCESS
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• When the Question function is available, the Q&A icon will appear at the top of the app.

• To send in a question, simply click in the ‘Ask a question’ box, type your question and the press the send arrow

• Your question will be sent immediately for review

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ONLINE ATTENDEES – VOTING PROCESS
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• When the poll is open, the vote will be accessible by selecting the voting icon at the top of the screen

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• To vote simply select the direction in which you would like to cast your vote, the selected option will change colour.

• There is no submit or send button, your selection is automatically recorded.

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ONLINE ATTENDEES – QUESTION PROCESS
----- End of picture text -----

• When the Question function is available, the Q&A icon will appear at the top of the app.

• To send in a question, simply click in the ‘Ask a question’ box, type your question and the press the send arrow

• Your question will be sent immediately for review

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Full Year 2020

DISCLAIMER

This presentation is intended to provide a general outline only and is not intended to be a definitive statement on the subject matter covered in it. The information in this presentation, whether written or verbal, has been prepared without taking into account the commercial, financial or other needs of any individual or organisation.

Certain information may relate to protected intellectual property rights owned by Nanosonics Limited (Nanosonics) and its subsidiaries (together the Group).

While due care has been taken in compiling the information based on the information available to Nanosonics at the date of the presentation material, neither Nanosonics nor its officers or advisors or any other person warrants the accuracy, reliability, completeness or timeliness of the information or guarantees the commercial or investment performance of the Group.

The information does not constitute advice of any kind and should not be relied upon as such. Investors must make their own independent assessment of the Group and undertake such additional enquiries as they deem necessary or appropriate for their own investment purposes. Any and all use of the information is at your own risk.

No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any person (including Nanosonics). In particular, no representation, warranty or assurance (express or implied) is given in relation to any underlying assumptions or that any forward looking statement will be achieved. Actual future events may vary materially from the forward looking statements and the assumptions on which the forward looking statements are based.

Subject to any continuing obligations under applicable law or any relevant listing rules of the Australian Securities Exchange, Nanosonics disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements in these materials to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any such statement is based. Nothing in these materials shall under any circumstances create an implication that there has been no change in the affairs of the Group since the date of these materials.

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